The Evolution of the Subprime Mortgage MarketFederal Reserve Bank of St. Louis Review
Format of Original26 p.
PublisherFederal Reserve Bank of Saint Louis
AbstractThis paper describes subprime lending in the mortgage market and how it has evolved through time. Subprime lending has introduced a substantial amount of risk-based pricing into the mortgage market by creating a myriad of prices and product choices largely determined by borrower credit history (mortgage and rental payments. foreclosures and bankruptcies, and overall credit scores) and down payment requirements. Although sub prime lending still differs from prime lending in many ways, much of the growth (at least in the securitized portion of the market) has come in the least-risky (A-) segment of the market. In addition, lenders have imposed prepayment penalties to extend the duration of loans and required larger down payments to lower their credit risk exposure from high-risk loans.
Citation InformationSouphala Chomsisengphet and Anthony Pennington-Cross. "The Evolution of the Subprime Mortgage Market" Federal Reserve Bank of St. Louis Review (2006) ISSN: 0014-9187
Available at: http://works.bepress.com/anthony_pennington_cross/34/